IAP
case to the CFPB for further proceedings
based on the appellate court's legal guidance.
In doing so, the full circuit court left
intact the panel's holding that retroactive
applying of a new Real Estate Settlement
Procedures Act interpretation violated
PHH's due process rights and the bureau is
bound by statutes of limitation regardless
of whether the CFPB is enforcing consumer
financial laws through a civil action or
administrative proceeding.
Moving forward, if this holding survives
a possible appeal in the U.S. Supreme
Court by the White House or from PHH
Corp., this decision will likely have major
implications for government enforcement
agencies and anyone that is targeted in an
enforcement action.
In response to the D.C. Circuit Court's
decision giving PHH Corp. a new chance
to challenge the $109 million penalty
the bureau previously imposed for
alleged misconduct, the company said
in a statement, "The decision by the full
D.C. Circuit Court of Appeals to uphold
the panel's ruling to overturn former
Director Cordray's decision under RESPA
with respect to our former mortgage
reinsurance activities, which includes
vacating the $109 million penalty, is an
important and gratifying outcome for PHH
and the industry. We continue to believe
that we complied with RESPA and other
laws applicable to our former mortgage
reinsurance activities in all respects.
Regarding the remand, we will continue to
present, if necessary, the facts and evidence
to support our position that mortgage
insurers did not pay more than reasonable
market value to PHH affiliated reinsurers."
The PHH Corp. case stems from the CFPB's
fight against PHH Corp, which started with
a $103 million increase to a $6 million fine
initially levied against the company for
allegedly illegally referring consumers to
mortgage insurers in exchange for kickbacks.
The fight ended, or so it appeared, with the
CFPB's leadership structure being declared
unconstitutional by the D.C. Circuit Court in
a 2-1 vote. But the CFPB appealed the ruling,
COLLECTOR 04.18
asking the entire court to decide the case from
scratch rather than the three-judge panel that
ruled on the case in October 2016. When
the full court of appeals granted the CFPB's
request in February 2017, the ruling permitted
the CFPB to defend the constitutionality of its
leadership structure before the full court.
ACA International filed an amicus (friend
of the court) brief in the PHH Corp. case
to share with the appellate court its unique
and direct perspective on why it believes
the bureau's powers must be reined in
within constitutional bounds to ensure
accountability and transparency. In its brief
from March 10, 2017, ACA argued that
"[t]he Bureau's structure and function-
wielding power over a broad swath of
Americans' lives, concentrating power in
the hands of a single Director, insulated
from democratic accountability-is ripe for
the arbitrary and unrestrained exercise of
power in disregard for due process, and for
the constitutional rights of the objects upon
whom that power is exercised."
ACA will continue to follow the PHH
Corp. case and will keep its members posted
on any new developments.
To read more about the most recent
significant judicial decisions involving
the credit and collection industry, ACA
members can always find concise case
summaries at www.acainternational.org/
industry-advancement-program.
Karen Scheibe Eliason is ACA International's
corporate counsel.
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